The Federal Government will use its guarantee to take the risk off the private sector to encourage their participation in the development of the economy through delivery of projects, Minister of Finance, Kemi Adeosun on Thursday in Abuja.
She noted that in Nigeria’s current state, Public Private Partnerships (PPPs) was the way to go as the government alone could not meet the
country’s infrastructural deficit even if it tried.
Experts say Nigeria requires about US$25billion annually for the next 10 years to grow its infrastructure to sustainable levels. The
Government has since note that this cannot be entirely funded by the public sector hence the Partnerships (PPPs)model to the forefront of
our considerations.
Speaking at a Knowledge Sharing Forum tagged “PPPs as a stable Financing Vehicle for infrastructure Development in Nigeria”,
organised by the Federal Ministry of Finance in collaboration with the African Development Bank Group the minister said “As far as our
financial strategy is concerned, we are very committed to PPP and for us, the way to accelerate it is for the Federal Government to derisk
the involvement of the private sector and gradually, introduce the private sector to PPP. This is because if we wait for every law to be
changed and regulations to be amended, we will really not get any single project done.
“We are going to start with a number of transactions in 2017 is to use the federal guarantee to simply take the risk away from the risky
avarices of the projects of for example, road projects which is risky. So we will de-risk, we will guarantee and will allow private money to
crowd in to these transactions.
“It is something we must crack because clearly, our infrastructure deficit is so large that even if we spend our entire budget on
infrastructure for the next five years, we cannot bridge the gap so we must be able to get private money because for us the best way to do
this is for the government to lead , for the government to guarantee investors their return, for government not to take all the risks” she.
The Federal Government, she said believes that PPPs is extremely important to restore and resolve the infrastructure challenge in the
country as this will unlock the potential of the country’s economy “and get us out of our current challenges. So, anything that advances
PPP is extremely important and welcome”.
She however noted that it had become clear that there were issues to be sorted out to ensure that the PPPs move forward and the government was ready to do its best. Adeosun also decried the incompletion of any PPP project at the federal level.
“It is very significant that we can’t really point at a single major PPP project done at the federal level . The successes we have are at
the state level and the question we must ask ourselves is what is the learning that we can take from the success of the states in executing
PPP projects and bring them up to the federal level , that is really a challenge for all of us” she said.
This is even as Vice President Yemi Osinbajo decried the lack of capacity by Ministries, Departments and Agencies (MDAs) to deliver PPP
projects.
Represented by the Special Adviser to the President on Economic Matters, Adeyemi Dipeolu, Osinbajo said in-house staff of MDAs must
have the requisite skills in financial, legal, technical, procurement and project management areas to be able to deliver on PPP projects.
“As things stand there is very limited capacity within Ministries, Departments and Agencies to deliver PPP projects.
“ Yet at the minimum MDAs should have in-house staff with requisite skills in financial, legal, technical, procurement and project
management areas to be able to deliver on such projects. Capacity building efforts including training and availability of resource
materials would be inevitable. In the short run however, one tried and tested way is learning by doing which can be achieved by
contracting consultants to assist but in a manner that ensures eventual transfer of knowledge to the public sector. In particular,
public servants have to be involved in actual transactions and negotiations he said.
He noted that that key factor for attracting private sector finance was a predictable and enabling policy, legal and institutional
environment adding that the Forum was another opportunity for a thorough analysis of policy, legal and institutional framework for
PPPs, including assessing whether the current framework provides enough incentive for local and foreign investors alike.
He said Nigeria clearly requires a PPP regime that matches its ambitions. A closely related issue is whether we have the appropriate
framework to enable the use of our very large and growing public pension assets estimated at about N5.3 trillion for the provision of
infrastructure without putting these assets at risk.
According to him, the number of PPP projects that have been concluded in the country so far was quite low, stressing that this was partly
because of unwieldy project appraisal and approval processes.
“We have to find ways to help reduce the time-frame for delivering projects while still ensuring that only those of very high quality are
delivered. One obvious solution is improved coordination between the different parties and institutions involved in project delivery”
“One major hindrance to the financing of PPP projects has been that majority of them have not been able to secure financing. This has been
attributed primarily to the projects not being bankable and often relying on government guarantees in order to progress to
implementation. We must use this forum to discuss ways of ensuring that more projects become bankable and that we do not allow a project guarantee dependent culture take root.
The ADB represented a Senior Management Staff Ando Mensah, pledged its commitment to continue working with Nigeria to ensure that the PPPs work. He said the bank will continue to promote PPP efforts in Nigeria adding that initiating PPP is a long term process that requires commitment.
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